Navistar International Corp. (NAV): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Navistar recorded adjusted net loss of $1.44 per share in the second quarter of fiscal 2014, wider than the Zacks Consensus Estimate of a loss of $1.30. Navistar's revenues rose 8.7% year over year to $2.75 billion, beating the Zacks Consensus Estimate of $2.67 billion. The upside in revenues was driven by the company's improving market share. Navistar expects Class 8 industry sales in fiscal 2014 to be in the range of 225,000 235,000 units in the U.S. and Canada. The company is also positioned to benefit from product launches, cost-saving initiatives and higher production. However, we are concerned about intensifying competition and strict EPA regulations, which are likely to impact the profitability of the company. As a result, we are maintaining our Neutral recommendation on Navistar.

Overview:

Based in Illinois, Navistar International Corporation (NAV) manufactures and markets International brand commercial and military trucks, MaxxForce branded diesel engines and IC Bus ("IC") branded school and commercial buses. The company also provides service parts for trucks and diesel engines. Navistar is one of the largest truck producers after Daimler and PACCAR.

Navistar operates through four industry segments, North America Truck Segment (64.1% of total revenue in the first half of fiscal 2014), North America Parts Segment (24.8%), Global Operations Segment (14.7%) and Financial Services Segment (2.3%). Segment revenues do not add up to 100% due to Corporate and Eliminations.

The North America Truck segment manufactures and distributes medium and heavy-duty trucks (class 4-8), military vehicles and buses in the North America markets including the U.S., Canada, and Mexico. The products are distributed under the International and IC brands. The segment also designs engines under the MaxxForce brand name.

The Global Operations Segment consists chiefly of the operations of wholly-owned subsidiary, International Ind stria de Motores da Am rica do Sul Ltda. (IIAA) in Brazil and truck and parts export businesses under the International and IC brands.

The North America Parts Segment supports the brands of International commercial and military trucks, IC buses, MaxxForce engines, as well as the other product lines. The segment provides proprietary products as well as standard truck, trailer, and engine service parts.

The Financial Services Segment provides retail, wholesale, and lease financing of products sold by the North America Truck and North America Parts segments, as well as their dealers in the U.S. and Mexico.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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